Tuesday, 18 October 2016

Restoration Of Fertilizer Subsidies In Ghana

Opinions about the role of fertilizer subsidies in spurring agricultural development in Ghana have fluctuated significantly over the years. Many experts believe that fertilizer subsidies represents an essential method for achieving long term food security in the country while providing social support to the poorest small holder farmer. There is widespread agreement that increased use of fertilizer and other productivity-enhancing inputs is a precondition for rural productivity, growth and poverty reduction. While the benefits of using fertilizer are widely known, fertilizer use in sub-Saharan Africa stood at just 8 kilogramme per hector compared to 78 kilogramme per hector in Latin America and 101 kilogramme per hector in South Asia. One of the reasons for these low rates is affordability.

Generally, in less developed countries like Ghana, the demand for fertilizer is thought to be more elastic under the assumption of readily available substitutes such as manure and other organic materials which is however not so. In an attempt to boost yields and food supplies, several African countries have re-introduced fertilizer subsidies after phasing them out in the 1990’s.

Even though there is still a deficit in production and supply in Ghana, the past six years saw an increase in maize production due to the affordability and accessibility of fertilizer to small and medium scale farmers who cultivate about 75 per cent of Ghana’s maize. The production of maize and rice especially suffered significant decrease in 2014 due to the withdrawal of subsidy by the Government the effect of which is the high price of maize we are experiencing now and the closure of companies who use the product as raw materials. Like any other Government policy or intervention, there are challenges in implementation of fertilizer subsidy policy leading to the right people not benefiting from it. For example, there is widespread evidence that subsidized fertilizer was typically captured by wealthy local elites and business men and women at the expense of the poor small holder farmer. What we need to do now is to tighten the loop-holes where people take advantage of. There are alternatives to increasing fertilizer use in the country other than direct price subsidies.

Significant reductions in farm gate fertilizer prices can result from investments in infrastructure at the port and in-land transportation and telecommunications networks. Policy changes that improve the functioning of financial markets and the broader macro economy are also expected to reduce farm gate prices. An appeal goes to policy makers to consider the potentials of the small and medium holder farmer who with the needed support can help the government realize its ‘use of made in Ghana products’ agenda. Importation of maize and rice to the country is needless considering the resources at hand. The re-introduction of subsidized fertilizer is welcome news to the farming community, what is important now is for government to ensure that the fertilizer gets to the farmers at the right time.